ThePortablePortfolio
Undercovered Value Investor, EM/AI Infrastructure/Crypto Rails
Energy stocks remain undervalued because shale depletion is real and AI needs natural gas, and the market is underpricing both. Diamondback Energy has quietly been doing tender offers ahead of its May 4 earnings, and EQT's 3.84% drop does not change the thesis. Value takes time. x.comÂ
US energy stocks are repricing because oil supply disruption has exposed pricing power the market had priced out. With oil at $110 and Hormuz disrupted, the S&P 500 still rose 3.4% on the week while Diamondback Energy jumped 13% and EQT 11.9%, moves that look like institutional accumulation meeting a catalyst rather than a news spike. The crowding in energy was on the short side, and extreme retail bearishness is historically a contrarian buy signal. x.com x.com x.com x.comÂ
EQT has convexity because low investment in natural gas collides with rising LNG and datacenter demand. The gas basin isn't that deep. x.comÂ
Infinity Natural Resources' lower trailing EV/EBITDA than Appalachian peers supports its value case. It trades at 4x versus 5-7x for EQT, Range Resources, CNX and Antero, while its P/E is 5 and trailing EBITDAX is $366 million. A somewhat bullish outlook for natural gas prices also underpins the view that Appalachian E&Ps offer value. x.comÂ
Natural gas leaders such as EQT face a structural shift, because about 20% of world supply is offline for three to five years with no quick fix. De-escalation doesn't change that, so market fakeouts should create opportunities in the group, with EQT attractive below $60. x.comÂ
EQT is still a favored gas play, and not too late, because Qatar's Ras Laffan LNG hub is badly disrupted. EQT raised hedging to nearly 40% of 2026 production at an average floor near $4.30/MMBtu and ceiling near $6.30, a tactical approach that adds protection selectively while staying exposed to upside. x.com x.comÂ
Diamondback Energy looks cheap against its sales at $189.27. Fair value is $197.99 to $251.99, about 5x mid-cycle sales give or take 12%, and it only becomes expensive above $313.49; trailing and forward reads differ by 40%, widening the range. The view rests on valuation levels from reported earnings and revenue estimates, not fundamental work. x.comÂ
The Iran war could be a huge catalyst for US energy stocks as energy independence becomes a necessity rather than a luxury. Nuclear names Constellation Energy, Vistra, Centrus and Cameco combine energy security with massive AI power demand, while natural-gas names Cheniere, EQT and Antero gain from LNG demand and tighter global supply. x.comÂ
Epsilon Energy is uninteresting now because its natural gas windfall window has passed and its pivot to oil is poorly timed. It burned through reserves waiting for a gas recovery after prices fell in 2022, then made a mediocre acquisition and is plowing oil capex into a heavily backwardated curve. Its midstream asset is diluted, SG&A is bloated, and incentives and hedges are poor. Oil above $80 to lock in, stronger gas, organic reserve growth or a price of $5.50 or lower would change that. x.comÂ
EROK looks like a low-risk buy as a debt-free, land-owning royalty business with little representation in major indexes, so it adds no meaningful systemic risk. The case only breaks if the world stops needing oil, the basins run dry, or AI no longer needs land, water and natural gas, all of which seem unlikely. x.comÂ
T1 Energy management missed its own revenue promise, and management is a large part of this thesis. It said Q4 revenue would top the prior three quarters combined, which implied $398M or more, but delivered $358M. The macro case for energy in the AI infrastructure buildout still holds, but for a young company this does not look great, and cutting losses is on the table. x.com x.com x.comÂ
US energy stocks are being steadily accumulated after a 17-year base, and that base will not resolve in a month. The sector broke out this year and pulled back on contracting volume, which is digestion, not distribution. Energy trades near 13x earnings versus about 20x for hyperscalers. Stocks now rise with oil and get bought back when oil falls. Tech is priced for the cost of capital to come down; energy for the reason it will not. x.com x.com x.comÂ
